This is the first so-called "Engle progeny" case to reach a district court of appeal following the Florida Supreme Court's decision in Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla.2006). Engle began as a smokers' class action lawsuit filed in 1994 against cigarette companies and tobacco industry organizations seeking damages for smoking-related illnesses and deaths. The class included all Florida "`citizens and residents, and their survivors, who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes
RJR primarily contends that the trial court gave the findings approved in Engle overly broad preclusive effect and thus relieved the plaintiff below, Matilde Martin, of her burden to prove legal causation on her negligence and strict liability claims. RJR also asserts Mrs. Martin failed to prove the reliance element of her fraudulent concealment claim, and that the punitive damage award is excessive and unconstitutional. For the reasons that follow, we find the trial court correctly applied Engle and Mrs. Martin produced sufficient independent evidence to prove RJR's liability for her husband's death. We conclude further the punitive damage award is neither excessive nor violative of RJR's due process rights.
The trial proceedings in the Engle class action were divided into three phases. In Phase I the jury was to consider "common issues relating exclusively to the defendants' conduct and the general health effects of smoking" and the class's entitlement to punitive damages. Phase II would determine whether the three class representatives received compensatory damages and the amount of class punitive damages if entitlement was established. Engle, 945 So.2d at 1256-57. Liability to and compensatory damages for each of the estimated 700,000 class members would be decided in Phase III. Id. at 1258. Phase I concluded with a verdict finding the evidence sufficient to prove strict product liability; fraud and misrepresentation; fraud by concealment; civil conspiracy by misrepresentation and concealment; breach of implied warranty; breach of express warranty; negligence; and intentional infliction of emotional distress. Id. at 1255. The jury also found the class entitled to punitive damages. Id. at 1256-57. In Phase II, the jury awarded $12.7 million in compensatory damages to the class representatives and $145 billion in punitive damages to the entire class. Id. at 1257. Before Phase III proceedings began, the defendants appealed the verdicts.
The appeal went first to the Third District Court of Appeal sub nom. Liggett Group, Inc. v. Engle, 853 So.2d 434 (Fla. 3d DCA 2003), then to the Florida Supreme Court which made the following rulings pertinent to the case before us. First, the court vacated the punitive damage award because, with no compensatory damage award to the class for comparison, the court could not determine whether the punitive damages were unconstitutionally excessive. 945 So.2d at 1264-65, 1276. Second, the court decertified the class for Phase III, finding class treatment infeasible "because individualized issues such as legal causation, comparative fault, and damages predominate," and allowed class members to file individual lawsuits within one year of the court's mandate. Id. at 1268, 1277. Third, the court "retain[ed] the jury's Phase I findings other than those on the fraud and intentional infliction of emotion [sic] distress claims, which involved highly individualized determinations," and gave these "common core findings... res judicata effect" in any subsequent
As a result, Engle class members opting to sue individually do not have to prove up the following matters found by the Phase I jury ("Engle findings"): (1) [generic causation] that smoking cigarettes causes aortic aneurysm, bladder cancer, cerebrovascular disease, cervical cancer, chronic obstructive pulmonary disease, coronary heart disease, esophageal cancer, kidney cancer, laryngeal cancer, lung cancer, pregnancy complications, oral cavity/tongue cancer, pancreatic cancer, peripheral vascular disease, pharyngeal cancer, and stomach cancer; (2) [addiction/dependence] that cigarettes containing nicotine are addictive or dependence producing; (3) [strict liability] that the defendants placed cigarettes on the market that were defective and unreasonably dangerous; (4) [fraud by concealment] the defendants concealed or omitted material information, not otherwise known or available, knowing the material was false or misleading, or failed to disclose a material fact, concerning or proving the health effects or addictive nature, or both, of smoking cigarettes; (5) [civil conspiracy-concealment] that the defendants agreed to conceal or omit information regarding the health effects of cigarette smoking or the addictive nature of cigarettes intending that smokers and the public would rely to their detriment; (6) [breach of implied warranty] that the tobacco company defendants sold or supplied cigarettes that were defective; (7) [breach of express warranty] that the tobacco company defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to representations of fact made by the defendants; and (8) [negligence] the tobacco company defendants failed to exercise the degree of care which a reasonable cigarette manufacturer would exercise under like circumstances. Id. at 1276-77. The supreme court noted, however, that the Phase I jury did not consider whether class members relied on the defendants' statements or omissions or whether class members were injured by the defendants' conduct. Therefore Phase I yielded no determination as to the defendants' liability to any individual class member. Id. at 1263.
Benny Martin was a long time smoker of Lucky Strike, a brand of cigarettes manufactured and sold by RJR, who contracted lung cancer and died in 1995.
The trial judge instructed the jury, in pertinent part, as follows:
The jury found that addiction to RJR cigarettes was a legal cause of Mr. Martin's death; RJR's conspiracy to conceal and actual concealment of information was a legal cause of Mr. Martin's death; RJR and Mr. Martin are respectively 66% and 34% responsible for Mr. Martin's death; and punitive damages are warranted. The jury awarded Mrs. Martin $5 million in compensatory damages, which the court later reduced to $3.3 million based on the jury's apportionment of fault, and $25 million in punitive damages. The trial court accordingly entered a Final Judgment for Mrs. Martin.
The crux of this appeal is the extent to which an Engle class member can rely upon the findings from the class action when she individually pursues one or more Engle defendants for damages. RJR contends the Engle Phase I jury findings in the class action establish nothing relevant to any individual class member's action for damages, and thus the trial court applied Engle too broadly in Mrs Martin's case. In RJR's view, the findings given res judicata effect by the supreme court facially prove only that RJR at some point manufactured and sold an unspecified brand of cigarette containing an undefined defect; RJR committed one or more unspecified negligent acts; RJR on some occasion concealed unspecified information about the health effects of smoking and the addictive nature of smoking; and RJR and several other entities agreed to conceal said unspecified information. Thus, RJR argues, notwithstanding the Engle findings Mrs. Martin was required to prove Lucky Strike brand cigarettes contained a specific defect rendering the brand unreasonably dangerous; RJR violated a duty of care it owed to Mr. Martin; RJR concealed particular information which, had it been disclosed, would have led Mr. Martin to avoid contracting lung cancer; and RJR was part of a conspiracy to conceal the specified information.
We disagree with RJR's characterization of the Engle findings. RJR attempts to diminish the preclusive effect of the findings by claiming, based on the Phase I verdict form, that the findings "facially" prove nothing specifically relevant to Mr. Martin's claims. In so doing, RJR urges an application of the supreme court's decision that would essentially nullify it. We decline the invitation. See Hoffman v. Jones, 280 So.2d 431, 434 (Fla.1973) (district courts of appeal do not have the prerogative to overrule Florida Supreme Court precedent). See also, Brown v. R.J. Reynolds Tobacco Co., 611 F.3d 1324, 1335, (11th Cir.2010) ("The Phase I approved
In support of its argument, RJR points out the Eleventh Circuit's decision in Brown v. R.J. Reynolds Tobacco Co., supra, an interlocutory appeal in an Engle progeny lawsuit pending in the United States District Court, Middle District of Florida. The plaintiff in Brown appealed a pretrial order ruling that "the Engle Phase I findings may not be used to establish any element of an individual Engle plaintiff's claim." Brown v. R.J. Reynolds Tobacco Co., 576 F.Supp.2d 1328, 1347-48 (M.D.Fla.2008). The Eleventh Circuit vacated the order, reasoning that the Florida Supreme Court's decision in Engle must be given the same preclusive effect in federal courts it would have in state courts. Brown, 611 F.3d at 1331. The court then explained what it believes are the scope of the preclusive effect of Engle and the burden individual plaintiffs in federal court must carry in proving applicability of the Engle findings to their claims. It determined the supreme court, in giving the Phase I findings res judicata effect in subsequent lawsuits by Engle class members, necessarily meant issue preclusion rather than claim preclusion—both of which are included in the concept of "res judicata"— because "factual issues and not causes of action were decided in Phase I." Id. at 1333. Then, relying on Gordon v. Gordon, 59 So.2d 40 (Fla.1952), and Seaboard Coast Line R.R. Co. v. Industrial Contracting Co., 260 So.2d 860 (Fla. 4th DCA 1972), the court concluded individual Engle plaintiffs may only use the Phase I findings to establish elements of their claims in federal court if they can demonstrate with a "reasonable degree of certainty" which facts were "actually adjudicated." Brown, 611 F.3d at 1334-35. This they can do by pointing to relevant parts of the class action trial transcript. Id. at 1335.
While we generally agree with the Eleventh Circuit's analysis of issue preclusion versus claim preclusion, we find it unnecessary to distinguish between the two or to define what the supreme court meant by "res judicata" to conclude the factual determinations made by the Phase I jury cannot be relitigated by RJR and the other Engle defendants. More importantly, we do not agree every Engle plaintiff must trot out the class action trial transcript to prove applicability of the Phase I findings. Such a requirement undercuts the supreme court's ruling. The Phase I jury determined "common issues relating exclusively to the defendants' conduct ..." but not "whether any class members relied on Tobacco's misrepresentations or were injured by Tobacco's conduct." Engle, 945 So.2d at 1256 (emphasis added). The common issues, which the jury decided in favor of the class, were the "conduct" elements of the claims asserted by the class, and not simply, as characterized by the Eleventh Circuit, a collection of facts relevant to those elements.
As pertinent to Mrs. Martin's claims, the class plaintiffs, to prove strict product liability, had to "`establish the manufacturer's relationship to the product in question, the defect and unreasonably dangerous
The Final Judgment and Amended Omnibus Order entered in the Engle class action sets out the evidentiary foundation for the Phase I jury's findings on these claims, and demonstrates that the verdict is conclusive as to the conduct elements of the claims. The order reflects that Lucky Strike, the brand Mr. Martin primarily smoked, was one of the sixteen cigarette brands named by the class representatives and that the Phase I jury findings encompassed all the brands. Engle v. R.J. Reynolds Tobacco Co., No. 94-08273, 2000 WL 33534572, at *1 (Fla.Cir.Ct. Nov. 6, 2000). The evidence supporting the strict liability finding showed the tobacco companies' cigarettes contain carcinogens, nitrosamines, and carbon dioxide, among other ingredients harmful to health which, when combined with the nicotine cigarettes also contain, make the product unreasonably dangerous. Id. at *2. The jury based its findings on the fraud by concealment and conspiracy claims on evidence showing RJR and its co-conspirators agreed to conceal their own scientific research results revealing that cigarettes cause cancer and other diseases and that the nicotine in tobacco is addictive. There also was evidence the defendants had taken on the duty to disclose by promising to share their research results with the public. The evidence further showed that not only did the defendants conceal information about the dangers of smoking they also enticed people to keep smoking by creating a controversy over whether smoking indeed had deleterious health effects. Id. at *2-3. And on the negligence claim, the jury determined the defendants owed all class members a duty to prevent injury from cigarettes the defendants knew to be harmful, and they breached their duty by selling cigarettes dangerous to health without taking reasonable measures to prevent injury to smokers. Id. at *4.
As a corollary to its argument on the preclusive effect of Engle, RJR asserts the trial court did not require Mrs. Martin to prove legal causation on her negligence and strict liability claims. On the contrary, the trial court instructed the jury that
RJR stipulated pretrial that nicotine in cigarettes is addictive and smoking cigarettes causes lung cancer. RJR further stipulated that Mr. Martin smoked Lucky Strike cigarettes, every Lucky Strike cigarette he smoked contained nicotine, and Mr. Martin did not smoke any brand of cigarettes other than Lucky Strike and Camel (another RJR brand). At trial Mrs. Martin produced evidence showing that: Mr. Martin started smoking at age 14 and by age 23 was smoking two packs of non-filtered Lucky Strike cigarettes every day; he tried unsuccessfully several times over the years to quit smoking and was distraught over it; Mr. Martin was diagnosed by a physician as being addicted to nicotine; his treating pulmonologist determined his decades of smoking caused him to contract lung cancer which in turn caused his death. The record thus demonstrates Mrs. Martin was required to prove legal causation, and she produced sufficient evidence for a jury to find that Mr. Martin's addiction to RJR's cigarettes was the legal cause of his death.
RJR also argues that Mrs. Martin failed to prove the reliance element of her fraudulent concealment claim because she put on no direct evidence showing Mr. Martin relied on information put out by the tobacco companies omitting scientific findings on the harmful effects of smoking. But the record contains abundant evidence from which the jury could infer Mr. Martin's reliance on pervasive misleading advertising campaigns for the Lucky Strike brand in particular and for cigarettes in general, and on the false controversy created by the tobacco industry during the years he smoked aimed at creating doubt among smokers that cigarettes were hazardous to health. Cf. Bullock v. Philip Morris USA, Inc., 159 Cal.App.4th 655, 71 Cal.Rptr.3d 775, 792 (2008) (plaintiff was not required to prove actual reliance on tobacco company's specific misrepresentation where there was evidence that the company sustained a broad-based public
Finally, RJR challenges the $25 million punitive damage award arguing it is improperly based on the Engle findings and excessive in light of the $3.3 million in compensatory damages awarded Mrs. Martin. Section 768.72(2), Florida Statutes, requires a plaintiff seeking punitive damages to prove by clear and convincing evidence the defendant is guilty of intentional misconduct or gross negligence. See Wayne Frier Home Ctr. of Pensacola, Inc. v. Cadlerock Joint Venture, L.P., 16 So.3d 1006, 1008 (Fla. 1st DCA 2009). The evidence Mrs. Martin produced in support of her claim included, among other things, a 1972 internal RJR document stating, "In a sense, the tobacco industry may be thought of as being a specialized, highly ritualized and stylized segment of the pharmaceutical industry. Tobacco products uniquely contain and deliver nicotine, a potent drug, with a variety of physiological effects." The same document describes nicotine as a "known ... habit forming alkaloid" and notes the "confirmed" tobacco user "primarily seek[s] physiological satisfaction derived from nicotine and perhaps other active compounds. His choice of product and pattern of usage are primarily determined by his individual nicotine dosage requirements...." At the time, the evidence showed, RJR was publicly denying nicotine is a drug, and tobacco companies including RJR were not only actively concealing their own research results revealing the harmful health effects of smoking cigarettes, but also purposefully misleading the public to believe the issue was unresolved. The evidence also showed that as early as 1935 it was technically possible to remove nicotine from Lucky Strike cigarettes but the company
Nevertheless, the $25 million award is presumed excessive under Florida law. Section 768.73, Florida Statutes (2005) provides, in pertinent part:
The punitive-to-compensatory ratio here is 7.58 to 1. Yet the trial court denied RJR's motion for remittitur because, "[c]onsidering the cause of action leading to the award of punitive damages, the Florida statutory cap of 3 to 1 is inapplicable." The court further concluded "[t]he award of punitive damages in this cause is not so excessive as to violate concepts of due process." We review the trial court's denial of remittitur for abuse of discretion but consider de novo whether the award is within the boundaries of due process. See Engle, 945 So.2d at 1263.
Turning first to whether remittitur was appropriately denied under section 768.73, the facts and circumstances in this case are significantly similar to those in Owens-Corning Fiberglas Corp. v. Ballard, 749 So.2d 483 (Fla.1999), in which the supreme court upheld a punitive damages award that was nearly 18 times the compensatory damages award. There the plaintiff brought a products liability action against Owens-Corning alleging he contracted mesothelioma after 30 years of exposure to Kaylo brand asbestos-laden insulation the company manufactured and sold. The jury awarded $1.8 million in compensatory damages and $31 million in punitive damages. Id. at 484-85. The evidence in the case showed that for 30 years Owens-Corning knew about the dangers of asbestos and not only concealed the information, but also intentionally misrepresented the safety of Kaylo, advertising it as "non-toxic." Id. at 487. Further, the company refused—because it would not be profitable—to correct the defect either by removing asbestos from Kaylo or by marketing an asbestos-free substitute it had developed, and refused to warn the public of the cancer risk from exposure to asbestos. Finding the evidence sufficient to support a finding of "flagrant disregard" and "apparent indifference" to the safety of those who were exposed to Kaylo, the supreme court concluded the trial court "acted properly and responsibly under section 768.73(1) in determining that the punitive damages award . . . fell within the exception to the statutory cap." Id. at 488-89. The evidence in the instant case demonstrates with similar import RJR's disregard for the safety of Benny Martin and other smokers of its cigarette brands: decades-long purposeful concealment of the health risks from smoking cigarettes, refusal to take nicotine out of Lucky Strike because sales would decrease, and collusion with other tobacco industry entities to affirmatively mislead the public into thinking cigarettes indeed may not be harmful. We find no abuse of discretion in the trial court's approval, under section 768.73(1)(b), of the $25 million punitive damages award.
The second question to be answered is whether the award violates constitutional due process principles.
Cooper Indus., Inc. v. Leatherman Tool Group, 532 U.S. 424, 433-34, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) (citations omitted). The three criteria a punitive damages award must satisfy under Florida law to pass constitutional muster are: (1) "the manifest weight of the evidence does not render the amount of punitive damages assessed out of all reasonable proportion to the malice, outrage, or wantonness of the tortious conduct;" (2) the award "bears some relationship to the defendant's ability to pay and does not result in economic castigation or bankruptcy to the defendant;" and (3) a reasonable relationship exists between the compensatory and punitive amounts awarded. Engle, 945 So.2d at 1263-64.
We find the $25 million award here is not out of proportion with what the jury clearly considered to be wanton conduct by RJR in marketing a product it knew to be harmful and misleading the public about the health risks of smoking cigarettes. Neither does the award place RJR in a precarious financial position as the evidence showed that between 2005 and 2008 it had shareholder equity of approximately $8 billion and net annual earnings of $1 billion. We recognize, as RJR points out, there are thousands of Engle progeny cases pending in the trial courts and the company's potential financial exposure is significant. But our review is limited to the facts and circumstances of this case, and we decline to disturb an otherwise reasonable punitive damages award to mitigate RJR's future liability. Finally, the 7.58 to 1 ratio of punitive to compensatory damages does not, under the circumstances of this case, offend due process. Neither the United States Supreme Court nor the Florida Supreme Court has adopted a bright-line limit to which punitive damages awards must adhere. RJR asserts the Supreme Court did just that and adopted a 1 to 1 ratio in Exxon Shipping Co. v. Baker, 554 U.S. 471, 128 S.Ct. 2605, 171 L.Ed.2d 570 (2008). But the Court's review of the punitive damages award in Exxon Shipping did not invoke due process principles. Rather, the "enquiry differ[ed] from due process review because the case [arose] under federal maritime jurisdiction," and the Court "examin[ed] the verdict in the exercise of federal maritime common law authority, which precedes and should obviate any application of the constitutional standard." Id. at 2626. There remain "no rigid benchmarks that a punitive damages award may not surpass," but "[s]ingle-digit multipliers are more likely to comport with due process, while still achieving the State's goals of deterrence and retribution, than awards with" higher ratios. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). We find no justification in the record to undo the jury's decision to award Mrs. Martin $25 million in punitive damages.
In summary, the Phase I jury findings given preclusive effect in Engle established the conduct elements of Mrs. Martin's strict liability, fraudulent concealment, civil conspiracy and negligence claims against RJR. The trial court therefore correctly applied Engle. Mrs. Martin produced sufficient independent evidence to prove causation,
CLARK and WETHERELL, JJ., concur.